English-conversation school operator Nova Corp.’s planned closure of about 50 branches at the end of this month is indicative of the severe business climate the company faces, following a number of student contract cancellations and an order from the government in June to partially suspend its operations.

The firm, the largest of its kind in the nation, has delayed paying some foreign teachers’ salaries.

Nova plans to reduce costs by cutting personnel after the branch closures are completed. However, Nova’s prospects remain uncertain.

According to the company, Nova had 418,000 students as of March 31, a more than 10 percent drop from the same time last year, due to former students filing a series of high-profile suits demanding the firm refund their tuition fees after they canceled lesson contracts.

Nova has also been hampered by a decline in the number of new students, following the Economy, Trade and Industry Ministry’s order in June to partially suspend its operations.

Nova listed revenues of \9.2 billion from April to June in fiscal 2007, a 31.9 percent drop from the same period last year. The firm had an after-tax deficit during the same period of \2.4 billion.

The firm’s delay in salary payments to some foreign teachers has caused a great deal of anxiety. “I’m worried about what’s going on,” a foreign Nova teacher in Osaka said.

The [Osaka-based] General Union, a labor union for Japanese and foreign workers, includes Nova teachers among its members [and is a NUGW sister union of Tokyo Nambu]. On behalf of the teachers, the union submitted a request to Nova Corp. President Nozomu Sahashi on Thursday demanding prompt salary payment for the teachers.

The union also asked Nova to return tuition fees to people who have canceled their contracts with the firm, and to give sufficient advance notice when it decides to close a school.

A union official said the union would consider taking legal action against Nova if the situation does not improve.

The Sydney Morning Herald, a major Australian paper, recently carried a story about Nova headlined “Teachers unpaid as company falters.”

According to the article, Australians account for 5,000 of the nearly 7,000 foreign teachers who work for Nova.

The firm was initially scheduled to pay instructors’ salaries on Sept. 14, but the salaries of some teachers were actually paid after Tuesday.

According to sources close to a financial institution, Nova is believed to be closing branches in prime urban locations to reduce tenant and personnel fees, as well as to secure large deposits to cover its daily operations.

After the ministry’s suspension order, Sahashi said Nova would seek a capital and business tie-up with another firm in order to strengthen its financial base. But Nova has not yet partnered with another company.

Observers believe Nova’s financial condition will not improve unless it takes drastic measures.

http://www.yomiuri.co.jp/dy/national/20070922TDY02008.htm

Instructors from Nova Corp. demonstrated in central Osaka on Friday to protest the firm’s delay in their salary payments.

About 50 foreign teachers, including those who have yet to receive salaries due to them on Sept. 14, began the demonstration from Nanba, in Osaka’s Minami district, holding signs that said, “Nova pay us now,” and “Resign Sahashi.”

“[Nova has] no respect for us,” a 40-year-old Australian instructor said. “We’re the people who make the company what it is, but there’s no honesty, trust or transparency. If I was in Australia [and something like this happened], I’d have already stopped going to work, but it’s hard for people who came from other countries to work for Nova to just give that up.”

Another 33-year-old Australian instructor said he did not go to work on Friday because his salary had not been paid. “I don’t plan to work for free,” he said.

“I’m sorry for the inconveniences caused to the students,” he said. “It’s too bad, because we want to keep the students at Nova. But the stress teachers are under, I think, is affecting the lesson quality.”

http://www.yomiuri.co.jp/dy/national/20070922TDY02008.htm

ENGLISH teaching chain NOVA, which employs more Australians and foreigners than any other Japanese company, has admitted it may have to shut hundreds of schools to account for massive financial losses this year.

NOVA has said in a statement that it has not made any decision about the closures, but Japanese media have quoted sources as saying it is planning to axe at least 200, and probably many more, of its 900 schools.

It will reportedly target schools in Tokyo and big cities in the Osaka, Aichi and Hyogo prefectures, where rents are exorbitant.

The Kyodo news service said the number of closures was likely to be far in excess of 200 because many landlords were threatening to evict the company over defaults on rent payments.

The cuts would affect more than 1000 teachers and tens of thousands of students. It is unclear what would happen to them, although the school has reportedly said it would allow students to shift to nearby schools.

It was reported earlier this week that the chain, which has the biggest share of Japan’s billion-dollar English lesson industry, failed to pay up to half of its 5000 foreign teaching staff last Friday.

It was the second time in two months that Nova has paid staff late. The wages finally arrived this week.

“A lot of people are really scared by this,” said a 27-year-old Australian teacher in Tokyo, who asked not to be named.

“We heard about all the late wages, and there have been rumours that NOVA is going under for a while — but now this. And they never tell us anything. We’re always in the dark.”

Louis Carlet, from Japan’s National Union of General Workers, said, “Usually we’re reluctant to speak to the press, because we don’t want to precipitate NOVA’s bankruptcy, but it’s too late for that. We putting preparations in place.”

NOVA’s financial crisis is partly due to overexpansion, but also because in July the Ministry of Economy, Trade and Industry banned the company, based in Osaka, from signing new students on long-term contracts for six months.

The order was given after a court ruled that Nova lied about its services and cancellation policy when soliciting students.

Nova posted a 2.5 billion yen ($A25 million) loss in operating profits for Japan’s last financial year, which ended in March.

http://www.theage.com.au/news/world/foreign-teachers-face-axe-in-japan/2007/09/21/1189881777745.html

Some Canadian English teachers are among the thousands of worried workers left without prospects and paycheques in the wake of vast financial problems for Japan’s largest private language school.

Nova Group, which has 900 schools, employs about 7,000 foreign workers — more than any other Japanese company.

Thousands of young Canadians have worked for Nova since it launched in 1981. When the yen was strong and the Canadian dollar weak, it provided post-college employment to pay off student loans, and offered a cultural exchange opportunity and valuable work experience.

The school’s financial problems have been getting front-page treatment in Japan. They stem from an advertising scandal and rapid over-expansion that began four years ago. Problems worsened in June, after Japan’s Ministry of Economy, Trade and Industry (METI) imposed a six-month ban on the practice of signing students to long-term contracts.

The ban came after a Japanese court ruled Nova had lied about its services and cancellation policies when soliciting students. Their practices were similar to the methods North American gyms often use sign clients to long-term contracts.

The ban led to a sharp decline in revenue when many of the 400,000 students ended their enrolment abruptly. Facing a cash-crunch, Nova began delaying the payment of salaries to foreign teaching staff and Japanese staff.

On Friday, foreign teaching staff was supposed to receive their overdue paychecks. Instead, they received a fax expressing “greatest regrets” and a promise that salaries will be paid next Tuesday.

“All the procedures for depositing the salaries have been completed. However … these were not completed in time to deposit the salaries today,” read the fax.

This was the latest in a number of faxes that have been sent since July, all of which announce delays in salary deposits.

Julie Chalmers, a University of Ottawa graduate originally from Sudbury, began working for Nova three years ago in Kyoto. She decided not to renew her recently expired contract, but is still waiting to receive her salary for August and September.

“Nova is such a huge company that it never really cared about its workers. We are all just numbers and the huge turnover rate shows just that,” she told CTV.ca.

Chalmers said Nova owes her about $2,600 for the month of August and estimates she’s due $1,700 for September. “I have no idea how I’ll get my money,” she said.

Business grad thought Nova would turnaround

Calgary-born Nabil Khan arrived in Japan two months ago, along with his fiancée. He was aware of Nova’s problems relating to the METI ban, but felt the company’s problems could be easily fixed given that Nova commanded the largest share of Japan’s multibillion-dollar private English teaching industry.

“When METI imposed the ban I saw no reason they couldn’t come out ahead … I looked at it from a strictly business point of view, many companies have been hit with much larger fines and penalties (Exxon after Valdez for example) and have made adjustments and come out ahead.

“The image of Nova was tarnished in the Japanese public’s eyes, but apologies and a true commitment to customer service would have fixed it. But nothing changed the company kept up its usual plan of operations. And to this day there seems like there is no one at the helm and we are on the Titanic as it is going down.”

Khan studied business at Memorial University in St. John’s and wanted to learn about Japan’s culture and language while seeking business opportunities in the country. He saw working at Nova as a way to get his foot in the door.

“I am owed over $2,000 from Nova and I don’t think I’ll see it. I have accepted it and am now looking for another job before there are another 7,000 teachers doing the same … at the moment, I look at it as volunteer work.”

Nova announced Friday it is closing about 200 of its 900 schools, many of which are located near train stations around the country. The company is hinting at further announcements next week.

In another fax sent to instructors on Friday, Nova CEO Nozomu Sahashi tried to reassure employees, writing: “The dark clouds that have been hanging heavily over us will be cast aside. I said previously ‘the darkest time is before the dawn’ and finally the first light of dawn can be seen … there will be no concerns regarding salaries from next month onwards. I cannot announce further details at the moment.”

http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20070921/japan_nova_070921/20070922?hub=TopStories

Nova Corp., the nation’s largest English-conversation school operator, plans to close about 50 branches at the end of this month, sources said Thursday.

The English-language school chain is to consolidate neighboring branches mainly in the Tokyo area, but also in areas including Osaka and Kobe, where a number of branches are located near each other.

The company already has begun notifying students who are subject to changes of classroom location, the sources said.

The business environment for Nova has become increasingly difficult recently, partly due to a decline in the number of students following a series of lawsuits filed by former students concerning repayment of class fees. In the wake of the scandals, the company also was hit by an order from the Economy, Trade and Industry Ministry to partially suspend operations of the school.

The planned consolidation of school branches is aimed at streamlining the business and reducing operational costs including rent.

Nova has already closed 12 school branches since March. The number of school branches stood at 913 as of the end of last month. Besides the 50 branches slated for closure at the end of this month, the company also is considering further closures, mainly among branches where office rental contracts are shortly due to expire.

Regarding the prospect of further closures, the company issued a statement saying, “At this moment, nothing has been formally decided.”

http://www.yomiuri.co.jp/dy/national/20070921TDY02003.htm